Vacant residential land tax in Victoria
In Victoria, the vacant residential land tax is a yearly charge on homes left empty for more than six months in the year before. Based on the capital improved value, the rates are 1%, 2% and 3% for the first year, the second year, and three or more years in a row. No threshold applies.
What vacant residential land tax is
State Revenue Office Victoria describes the levy as a yearly charge on empty residential land in Victoria that exists to grow the supply of homes. Common names for it are VRLT, a vacancy tax, and an empty homes tax. That is separate from land tax, the absentee owner surcharge and the federal vacancy fee for foreign owners.
Before 2025, the tax applied in just 16 Melbourne council areas. Residential land across Victoria is now covered, so a property standing empty in Melbourne is treated the same as one in a country town.
When a home is treated as vacant
A property is vacant when, for six months in the previous year, no one lived there as a home, under a genuine lease, or under a short-term letting. According to the SRO, those six months need not run continuously, but the property does have to be in real use. Merely listing it for rent or sale does not count.
VRLT can also apply in these cases:
- a home that has been under construction or renovation, or that cannot be lived in, for two years or more;
- land in metropolitan Melbourne that has gone five years or more without development and can support homes, from 1 January 2026.
Vacant residential land tax rates
The rate takes a share of the capital improved value. The Victorian Government defines that value as the assessed market value of land and all improvements, such as buildings. Ordinary land tax works from a different base, the site value.
| Years in a row liable for VRLT | Rate |
|---|---|
| One year | 1% of capital improved value |
| Two years | 2% of capital improved value |
| Three or more years | 3% of capital improved value |
Undeveloped land in metropolitan Melbourne stays at 1%. So does new residential land that has sat unsold and unused for more than three years. Before 2025, the SRO says, VRLT charged 1% on all properties. The office offers its own VRLT calculator; to get the total, multiply the rate by the capital improved value.
Exemptions for holiday homes and other cases
Any land that is exempt from land tax, such as the owner's home, is exempt from VRLT too. The exemption for a holiday home applies when the owner or relatives use it for 4 weeks or more during the calendar year. You can split the four weeks up and share them. But the owner's main home has to be in Australia, and each year you can claim the exemption for just one holiday home.
Other exemptions include:
- properties that changed ownership in the year before;
- land that has only recently become residential land;
- land that cannot be developed for housing;
- accommodation for work;
- a residence that was under construction, under renovation or uninhabitable in the year before.
VRLT leaves out commercial residential premises, residential care facilities, retirement villages and land in alpine resorts.
Telling the SRO
Notification to the SRO is due by 15 February for owners of vacant residential land. An owner who believes an exemption applies must send a notification first, then ask for the exemption through the VRLT portal. Any Victorian property clearance certificate lists outstanding VRLT.
Questions
What is vacant residential land tax in Victoria?
This is a yearly Victorian tax, and it applies to residential property left empty for more than six months in the previous year. The charge depends on the number of consecutive years the land has been liable: between 1% and 3% of the capital improved value.
Does vacant residential land tax apply to holiday homes?
Not if the holiday home is used by the owner or relatives for at least four weeks of the calendar year, with the owner's main home in Australia. A single holiday home can be exempt in any year.
How is vacant residential land tax calculated?
Multiply the rate by the capital improved value: 1% for year one, 2% for year two, 3% from the third consecutive year onward. No threshold applies, and there is no COVID levy.
Is GST payable on vacant residential land tax?
No. The ATO says that any tax paid to Australian government agencies is GST-exempt under Division 81, and VRLT is such a tax.
When is notification required for vacant residential land?
Use the SRO's VRLT portal to report land that stood vacant during the previous year, and do it by 15 February each year.